France’s 🇫🇷 government is not seizing its citizens savings to finance its rearmament.
This is what they mean by “mobilizing” private funds (🪡 🧵)
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Discussion
The Senate voted on Tuesday March 5, 2024 for a bill aimed at mobilising part of people’s state savings accounts towards companies in the defense industry.
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For context, France historically mobilises savings for various social and environmental projects through state savings accounts such as the “Livret A” and the “sustainable and solidarity account (LDDS)”.
These are regulated by the State, which determines their operation, interest rate, and ceiling. Interests on these are exempt from income tax and social security contributions.
In 2024, according to the Banque de France, more than 80% of the population have such savings accounts, amounting to roughly €570 billion.
How it works: 40% of the funds deposited in these accounts are managed by banks on financial markets to remunerate savers, and the remaining 60% are invested by the state in public interest projects to offer long-term loans at preferential rates.
Typically, Livret A savings go towards social housing and urban renewal (hospitals, public transport, universities), while those of the LDDS finance the energy transition.
Going back to the law that was voted on by the Senate, the proposal seeks to expand the list of sectors that can be financed by these accounts to include the defense sector. The proposal is pending further approval by the National Assembly.
It does not mean, the government will seize private savings to finance the war.
Regarding the outlook of adoption of this proposal, this is an idea that the Senate has already attempted to impose three times in less than two years.
The current government are reluctant, preferring the creation of a new European savings product to build a European market to finance major projects related to climate transition, AI, and Defense.
Additionally, this seems to be an overwhelmingly unpopular measure for the French, of which 54% are opposed to using their savings to finance national defense and only 29% in favour, according to polls.
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